MMA Fighting reports that Joseph Benavidez has fired his agents at MMA, Inc. citing the looming Reebok sponsorship deal as a reason for the departure. The news is another example of the changing landscape of UFC business.

If you count his WEC time of service plus his UFC fights, it which would put him in the $15,000 range under the Reebok sponsor pay scale. Benavidez is a fan of the Reebok deal stating that he has not received $15K in sponsors since his title fight against Demetrious Johnson in December 2013. Thus, the Reebok deal, for Benavidez, would be good for him.

Benavidez has not closed out future representation but like everyone else in the industry, they are waiting to see the results of the new deal.

Notably, UFC fight managers were set to meet this weekend to discuss UFC business. The meeting was set up by Benavidez’s now ex-managers at MMA, Inc.

Payout Perspective:

Benavidez leaving his agents to go at it alone is a direct result of the Reebok sponsorship deal. It’s clear that fighters realize that the sponsorship market is changing and are not clear the worth of an agent at this point. Based on this, it reveals that the primary service an agent does for fighters in MMA is obtaining sponsors. Aside from that, fighters like Benavidez believe that they have sufficient support to go at it alone. Obviously, Benavidez is a veteran and belongs to a fight camp that provides the support needed for a fight. The future of the agent in the UFC is uncertain. It will be up to agents to show that they add value for a fighter and not just through fight night sponsors.

Yahoo! Sports reports that Donald Cerrone is set to lose $60,000 in sponsorship money due to the new Reebok sponsorship deal. However, Cerrone appears ok with it.

Almost 2 years ago, Cerrone signed on with Kevin Harvick’s sports agency and picked up some key non-endemic MMA sponsors which include Budweiser and Fram. Notably, both are UFC sponsors (Bud Light is the actual UFC sponsor although I am not sure if there is a true difference in sponsorship between Bud and Bud Light). He also has had golf-cart operator EZ-Go and others on his shorts in the past too.

Despite losing the sponsor money, Cerrone remained upbeat about the change in policy in the UFC. He acknowledged he will not make the “big money” but thinks it will work out. He stated that his sponsors will stick with him despite the shift. Of course, Budweiser and Fram are official sponsors so this helps. He noted that the deal with Budweiser is for a year and appears to be guaranteed regardless of whether or not he will wear it to the ring.

Payout Perspective:

Interesting to note that the article mentions that one other UFC official sponsor will be on the Reebok uniform along with Reebok. One might suspect Bud Light or Fram would get rotating spots on the uniform at some point. Cerrone is in a unique position as he has secured individual sponsor deals with official UFC sponsors so those relationships are more likely to remain intact. But, does anyone find it odd that Cerrone remains upbeat about the sponsor deal despite losing money? He is one that has admitted to spending money once he receives it which is one reason that he is willing to fight anytime, anywhere. So, if he’s losing money on this deal, wouldn’t you be a little upset?

Fortunately for Cerrone, he is a crowd favorite and one could see a crossover with NASCAR and perhaps making appearances at NASCAR events for a sponsor like Fram or Budweiser or another non-UFC official sponsor. Thus, he can still make money outside of the Octagon without having to wear a patch on his shorts.

In light of Zuffa’s announcement that it has changed the policy through which it will compensate fighters under the Reebok sponsorship deal, a manager of UFC fighters has spoken out about the deal and the sponsorship landscape. Oren Hodak of KO Reps who represents Johny Hendricks, Ovince St. Pierre and Joe Lauzon among others has expressed his opinion on the problems with the current state of MMA sponsorship.

“The current problem in the MMA landscape is the managers/agents that are in the business. They aren’t working hard enough or smart enough going after non endemic brands. They are simply seeing a logo on another fighter and then contacting that company. Or even more pathetic is agents calling another agent to help them out with a deal,” Hodak told MMA Payout. Hodak holds a Master’s degree in Sports Marketing and worked in the sports industry for several years before opening up his MMA management company.

“KOreps has had great success giving companies such as Reebok, Bass Pro, Smart Stop Self Storage, Instaloans and most recently Parts-express.com their first real taste of Octagon exposure in addition to partnering with fighters outside of the cage,” stated Hodak. “Sure, the sponsor tax takes money out of budgets from your core MMA clothing and supplement companies but there are plenty more companies out there with a sports marketing budget. Over the years the UFC has slowly raised the sponsor tax and added numerous categories to the non-approved list, giving fighters less and less opportunity. In turn, managers have an excuse as to why they aren’t producing and UFC has fighters openly complaining about sponsorship money.”

On Monday, the Sports Business Journal reported that the UFC had changed the way it would pay its fighters through the Reebok sponsorship deal which goes into effect in July. Instead of relying on media rankings, it would base the sponsorship pay on the number of fights an individual has had under Zuffa. This would include fights in Strikeforce and WEC after both were acquired by Zuffa. The change in the policy was said to be based on speaking with a number of fighters and managers.

“Some fighters may come out ahead with this new deal but I believe the fighters with professionally qualified sports management behind them will not,” Hodak added, “We have already heard from numerous fighters losing deals because they can’t utilize the valuable fight night impressions surrounding tv viewership.”

Payout Perspective:

It’s clear that despite the change in payment structure, the UFC-Reebok deal will still affect the bottom line of many fighters. Hodak points out an issue he sees as a manager of fighters. It’s an interesting viewpoint and a constructive critique on the nature of the business. It also calls into question the management practice of some in the industry. Not only will the sponsorship landscape change in the UFC, but the management of fighters may change too. We shall see how this plays out in the UFC after the Reebok deal is put into place this summer.

MMA Fighting reports that UFC middleweight champion has signed with Paradigm Sports Management. The agency represents an array of athletes including other UFC stars such as Conor McGregor, Michael Bisping, Matt Mitrione and Tony Ferguson.

The Orange County, California-based firm secured the middleweight champ after he visited its offices. Weidman is also represented by the William Morris Endeavor agency. One might conclude that William Morris will help Weidman with mainstream media-type opportunities while PSM will handle the day-to-day MMA business.

Payout Perspective:

The only surprise here is that Weidman was without official representation prior to his signing. The list of fighters already with PSM probably helped out with Weidman’s decision. With the new sponsor deal set to go on in July, the management role may see a shift to helping with other fighter issues. Obviously, there is the big issue of drug testing with Weidman’s fight with Belfort Memorial Day weekend where one might see a manager ensuring that all of the drug protocols are followed by the commission.

Dana White has expressed his discontent with the current negotiations with UFC Lightweight Gilbert Melendez and has all but told the former Strikeforce Champion to look elsewhere for work.

On Wednesday’s “UFC Tonight” on FS1, White spoke out about the contract negotiations with Melendez’s representation as the parties are at an impasse with a new deal for Melendez.

Although it was not officially reported how much he made at UFC 166, he did receive a $60K FOTN bonus for his bout with Diego Sanchez. He did make $175K at UFC on Fox 7 in a loss to Benson Henderson. One assumes that Melendez would like to improve on his $175K show salary.

Strikeforce Pic of Gil (Via Wikimedia Commons)

The MMA Report brings up a good question: whether a fighter should look for top dollar or the best competition when it comes to deciding where to fight. There is the example of Ben Askren who was let go by Bellator in order to presumably sign with the UFC. However, he chose to sign with Singapore-based OneFC where he will make $50K/$50K to start. Arguably, Askren is one of the top welterweights in the world and has a personality that would make him marketable. The knock on Askren is that his fight style is not appealing to the casual viewer. One would think that he would choose the UFC over an overseas company.

When I think of the Ben Askren choice it reminds me of NBA player Josh Childress. A Stanford alum, he left the NBA after 4 productive years and with an offer to stay in the NBA but decided to make more money in Greece. But after 2 years, Childress ended back in the NBA and cited issues with getting paid and less amenities overseas as compared to the NBA as reasons he chose to return. Thus, this is an example of why taking the most money may not be the best for a career. Of course, MMA differs from basketball if you were to just compare the physical rigors and average shorter career span of a fighter.

One of the underlying issues that may be hampering the negotiations is that Melendez is represented by the same agent as Georges St. Pierre. As we know, GSP’s departure from the UFC was awkward and may have been less than amicable. GSP spoke out about drug testing in the UFC which unsurprisingly drew the ire of White. Is the difficulty in brokering a new contract for Melendez in part due to White’s anger at GSP via his agent?

Then there’s the use of the media in the negotiations. First, there was White’s public comments on FS1. Then, in a bit of a surprise, the UFC on Fox twitter account tweeted an article it posted on its Fox Sports web site in which it mocked Melendez for the stalled negotiations. The article actually admits it has scant information on negotiations but would speculate on the reasons why Melendez has not come to an agreement.

Payout Perspective:

Melendez has a short timeframe to earn as much as he can in a sport where the premise is to inflict maximum pain on your opponent. This takes a toll on the fighter physically and mentally. However, the sacrifice is worth it assuming he is compensated enough to take care for himself and his family. In MMA, it’s unlikely that a contract will make someone set for life but a fighter has the potential to do much better than he would if he or she just had a 9-5 job. We do not know how much Melendez is asking for but one might assume he wants to make sure he is fairly compensated (in his mind) for his sacrifices.

Like many sports executives, White is negotiating through the press. Calling out Melendez’s agents is a part of negotiations. A new wrinkle is the use of Fox Sports to seemingly call out Melendez for not agreeing to a contract. In other sports, the media produces pieces calling out one side or another in negotiations but the Fox Sports piece is a blatant run at Melendez. Is it fair? Should Melendez and his representatives respond with their side of the story? We shall see.

You may recall that Anderson Silva signed on with 9ine in 2011. It also represents several soccer stars as well.

Via MMA Fighting:

According to 9ine’s CEO Marcus Buaiz, the company will take care of dos Santos’ image, social media and contracts with sponsors. “Cigano” is currently sponsored by Nike, TNT and Corinthians.

“Cigano is a great champion with an image that lots of companies want to work with, and he has a good relationship with the media,” Buaiz said. “9ine’s goal is to increase what has already been done with our excellence of working athlete’s image.”

Payout Perspective:

You may recall that JDS suddenly left long time manager Ed Soares in June 2011 for the Guedes Group. That occurred months before his KO of Cain Velasquez on the first Fox show. The latest development is an interesting move by JDS since he has already secured top sponsors. We will see what his new agency can do for him.

MMA Junkie reports that Donald Cerrone has signed on with NASCAR driver’s Kevin Harvik’s agency – Kevin Harvik, Inc. The signing is the company’s first MMA client.

Harvick is a big fan of MMA and has been seen at UFC/Fox events as part of the new “synergy” of cross promotion between Fox’s sports properties.

Cerrone indicated that he hoped that Harvik’s professionalism and contacts with blue chip sponsors. Cerrone is the third Harvik client as the company switched from race operations to professional athlete management.

“That’s what I think we need in the sport,” Cerrone said. “We don’t need, ‘Hey, my brother knows a little bit about fighting. He can manage you.’ I see a lot of that in the fight game — guys that know nothing but think they can make a dime by just managing people, and it’s crazy to see. In the NFL, you don’t just have your uncle call up the NFL and say, ‘Oh, I need to do a Nike deal.’ That happens a lot in MMA.

Payout Perspective:

Although Cerrone’s intentions seem valid, the decision to sign with Harvik does not seem to agree with his statement. Harvik’s company is new and Cerrone is the first MMA client. Moreover, the company switched over from race operations to athlete management. The point being is that if Cerrone is seeking experienced representation then Harvik may not be it. Does Harvik have the contacts, know the market and the MMA sponsorship game? If the answer is that he does have sponsorship contacts interested in sponsoring an MMA fighter then Cerrone is making the right decision. But, if this professional relationship is based on a personal friendship its the same scenario that Cerrone describes above.

We’ve seen this recently with Jay-Z forming his own athlete representation company, Roc-Nation, and quickly signing Kevin Durant, Robinson Cano and Victor Cruz. Obviously, Harvik’s company is much smaller but the idea of experience equaling monetary results is a theory that may be tested.

MMA Junkie had a recent article on the managers’ role in representing fighters. With the recent departures of Jose Aldo and Mauricio Rua from their representation, the need for managers has come into question.

The Junkie article looks at long time manager Alex Davis as he discusses the need for a fighter to have good management. He also addresses the question of whether top notch fighters need representation anymore. This comes on the heels of Rua’s statement (which could have been taken out of context) that the UFC does not want its fighters to have managers.

“Some people will say that once a fighter reaches a level where he enters the UFC, he doesn’t need management anymore, but usually a manager has worked very hard to get him to that point without ever getting properly rewarded for his efforts,” Davis said. “Only once a fighter is at the top can a manager have a chance at making something in the deal, which is only fair. Not only that, but its not like, ‘Hey, great, now I am in the UFC. My problems are over!’ Far from that. Things get way more complicated.

Davis identifies more responsibility outside of just fighting that the fighter must consider once he makes it in the UFC. There are many tasks that a manager should handle while the fighter concentrates on training.

In addition, the manager may have contacts with sponsors and promoters in helping the younger fighter achieve his goals.

Payout Perspective:

Manager and agent may be two separate jobs or one in the same. Certainly fighters can have both or one individual to handle both duties.

One need only look to Matt Mitrione, Brandon Vera and Alistair Overeem more recently as examples of what happens when you have issues with management. Mitrione publicly fired his manager, Vera lost a year due to a contractual dispute and Overeem is currently in litigation with Golden Glory.

Still, there are many MMA management agencies that take care of their fighters in securing sponsorships and public appearances. This can go a long way in getting fighters the visibility, notoriety and opportunity to increase the value of their own personal brand.

Heavy MMA had a good two part (one and two) series last year on the role of an agent.

The Junkie article points out the reasons that a good manager is necessary in a fighters’ career. Certainly, there are many responsibilities and tasks a manager needs to do in helping fighters prepare for their next fight while making sure they maximize their opportunities.

The question is how much is a manager worth to a fighter? For top tier fighters, do they need a manager? Can the fighter have someone do the same tasks for less, without having to give up a portion of their purse or sponsorship payout. We will see if consolidation of management duties becomes a trend in MMA. There is a definite need for good representation, but at what cost?

TMZ first reported that UFC heavyweight Alistair Overeem has sued his ex-management group, Golden Glory. According to TMZ, the lawsuit requests that the court break his contract with Golden Glory. Since the filing, Golden Glory has fired back at Overeem.

Overeem is suing “Knockout Investments, B.V., Golden Glory, Golden Glory California, Bas Boon” and a bunch of “Does.” According to the complaint, KOI is the legal entity that manages Overeem and allegedly KOI performs its management function through its affiliate, Golden Glory.

According to the allegations in the complaint, Overeem’s contract with KOI and GG was signed in July 2007 and is for a 5-year term. The agreement has an automatic renewal provision (for another five-years) unless either party does not want to renew and then any such notice must be served six months before renewal.

The agreement provides that KOI and GG were to provide a number of services–Overeem alleges that some of these terms are ambiguous and unenforceable (e.g., “acting as a ‘confidential agent,'” “looking for personal sponsors,” and “making publicity”) in a personal services contract.

Under the agreement, Overeem alleges that KOI and GG are entitled to 35% of Overeem’s pre-tax income. Overeem alleges that under the contract the same 35% is due “for any deals ‘within one year after this contract has expired and/or were prepared during the duration of this agreement.'” Overeem claims the management agreement also includes a provision that fines Overeem $10,000 for any breach of the agreement and a $5,000 per-day penalty for each day the violation continues.

Overeem asserts two claims–one for breach of contract seeking “an amount in excess of $151,000″ and a judicial declaration concerning the parties’ respective rights under the management contract. Essentially, he wants the court to declare that KOI and GG are not entitled to his UFC money. Overeem also seeks an accounting.

A few thoughts — and I am doing this quickly. The liquidated damages clause — i.e., the 10k penalty and 5k a day add on as the violation continues– is not, in my view, by any stretch of the imagination enforceable. That said, there is no allegation that I saw that KOI or GG are seeking to enforce that provision. So it may be a moot point.

Turning to the crux of the complaint. Overeem lists a bunch of “failures” on the part of KOI and GG — chiefly, failures to pay, including money from FEG, Dream/K-1s parent, but he really alleges nothing specific, e.g., an amount. He also claims he was not “properly informed” and alleges that KOI and GG failed to “protect [his] interests.” Overeem also alleges that he believes KOI and GG received some undisclosed bonus arising from Overeem’s signing with the UFC–nothing more.

While certainly some of the provisions in the agreement could have been written more eloquently, whatever services Golden Glory provided, it seems pretty clear based on my read of the complaint (which is biased for Overeem) it is entitled to 35% of his pre-tax income and it also seems pretty clear that they have a trailing commission for a year even after the contract has expired. Some of the allegations arguably make KOI and GG look bad, e.g., allegedly managing him in jurisdictions where KOI and GG were not licensed and allegedly pushing him to fight when injured. But not sure that gets him around the 35% or somehow renders the management contract a nullity.

In any event, I read this quickly but sounds like Golden Glory has a nice little claim for the UFC 141 income, which would presumably include sponsorship money as well.

All of this said, let’s see how the story unfolds as there may be more out there.

“We are currently in receipt of a copy of Mr. Overeem’s lawsuit and our clients are assessing all available defenses and counterclaims,” read the statement from Golden Glory’s legal counsel at The Law Offices of Roderick J. Lindblom, APC.

“This lawsuit is a preemptive action on the part of Mr. Overeem and his counsel in response to KOI’s recent notification to Mr. Overeem of numerous violations by him of his management agreement with KOI, including but not limited to his failure to pay commissions for past fights and endorsement deals secured by KOI and Golden Glory.”

Payout Perspective:

The lawsuit makes one think about Dana White’s previous statements about Golden Glory business practices when Zuffa unloaded the Golden Glory stable. The lawsuit is in its infancy stages and we will have more as time goes on.

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.

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With Overeem only stating that “a breach of trust” was the reason for his departure, details behind the split are up for speculation and many people may be quick to point the finger at the recent issues between Golden Glory and Zuffa.

Overeem’s former manager, Bas Boon, indicated that Overeem’s departure was not related to the recent Zuffa-Golden Glory squabble which saw Zuffa cut Overeem, his brother, Valentijn, and Marloes Coenen. In a press release, Boon cited the current state of the fight business (outside of Zuffa we presume) as the culprit as he cited the fact that Golden Glory fighters are owed money from FEG and K-1. Boon cited the fact that Overeem is fighting in the UFC this December as a sign that the Zuffa-Golden Glory relationship is not fractured. But it appears that the money owed Overeem from other fight organizations may be the reason for the split.

Payout Perspective:

Overeem’s departure is interesting considering it occurred after Golden Glory negotiated his contract for the Lesnar fight. This is another example of the tenuous business of fight management. We will see if Overeem decides to sign with another agent and, if so, whether the agent will make an effort to collect the past debt from the organizations.